Double-check your merger info - or face significant fines for inaccuracies
Failing to submit complete and accurate information to the European Commission during a merger investigation can have costly consequences. Two years after Facebook was fined EUR 110 million for providing incorrect or misleading information on its WhatsApp acquisition, the European Commission has fined General Electric EUR 52 million for submitting incorrect information during the review of its acquisition of LM Wind.
Even though precisely how the Commission discovers these inaccuracies may vary – of its own accord, through third parties or from the notifying parties themselves – these fines suggest that it will find out eventually. This is all the more reason for notifying companies to supply correct and complete information. Failure to do so can result in substantial fines.
General Electric (GE) notified the Commission on 11 January 2017 about its acquisition of LM Wind. During the merger investigation, the Commission asked GE to submit information about relevant product developments. GE did not provide any information on the development of a second power output wind turbine for offshore applications. A third party informed the Commission that GE did in fact offer a higher power output offshore wind turbine to potential customers. GE then withdrew its notification and re-submitted it on 13 February 2017, this time including complete information on a future 12 megawatt wind turbine. The Commission approved the merger on 20 March 2017.
In July 2017, the Commission sent a Statement of Objections to GE claiming that GE violated its procedural obligations under the Merger Regulation. This was followed by a fine in April 2018 for negligently providing incorrect information in the merger notification form. According to the Commission the infringement obstructed a comprehensive assessment of the transaction.
This decision is in line with the Commission's recent focus on procedural breaches of merger control. In April 2018, Altice was fined EUR 124.5 million for gun jumping. Investigations on two other cases on procedural fairness, against Canon and Merck and Sigma-Aldrich, are still ongoing.
Receiving correct and complete information is essential for a timely and effective merger review. Any failure to do so may lead to a fine of up to 1% of annual worldwide turnover. The amount of the fine for a breach of these procedural aspects of the merger control process depends on the nature, gravity and duration of the infringement. Another important factor for determining the level of the fine is whether or not the company is aware of the importance of the information to the process. Companies are therefore well-advised to double-check the completeness and accuracy of the information provided to the Commission throughout the whole merger notification process.
This article was published in the Competition Law Newsletter of May 2019. Other articles in this newsletter:
- European Court of Justice: principle against double jeopardy does not preclude dual fines
- Qualcomm loses General Court battle over request for information
- Financial sector remains on the antitrust radar: the report on loan syndication is out
- Report on competition law's digital future: time for (r)evolution?
- Dutch Trade and Industry Appeals Tribunal upholds appeal and confirms fines on taxi companies
- ACM launches probe into Apple's App Store
